The benchmark BSE index ended higher at 1.81 percent and the NSE index closed up 1.75 percent, posting their biggest daily gains in over three months on hopes foreign buying would continue as the country can better weather any Fed-related volatility due to improving fundamentals.
The benchmark 10-year bond yield ended down 5 basis points at 8.45 percent, dropping to its lowest level in more than 11 months on hopes foreign investors would continue to bet on India despite some concerns about U.S. interest rates.
The partially convertible rupee ended stronger at 60.83/84 per dollar against Wednesday's close of 60.92/93, tracking a rally in domestic shares on hopes that the country would retain its appeal to foreign investors despite uncertainty about the outlook for U.S. interest rates that hit other emerging markets.
The five-year rate ended down 8 basis points at 7.86 percent while the one-year rate closed 2 basis points lower at 8.41 percent.
India's cash rate ended unchanged to Wednesday's closing level of 7.95/8.00 percent. (Compiled by Dipika Lalwani)